Wednesday, November 4, 2009

Recession benefits some businesses

Less than two years ago, the Brooklyn Brewery found itself in a bind that had squeezed many companies out of New York. It wanted to expand, but the rapid gentrification of its neighborhood, in Williamsburg, Brooklyn, had pushed rents beyond what it could afford.

That was before the recession took hold in the city. Now, the brewery is taking advantage of the softer real estate market to grab a bigger chunk of space before it could be snapped up and converted into another hotel, store or apartment building.

But tenants and property managers called Brooklyn Brewery’s new 15-year lease an exception to the continuing trend of industrial operations being pushed out of areas of the city that once were reserved for them.

In mid-2008, Mr. Hindy said...sales of Brooklyn Brewery’s premium beers, which it cooks up in Williamsburg, were rising steadily, but it had no room to expand its brewhouse. Landlords in the neighborhood were asking as much as $30 a square foot a year in rent, more than triple what the brewery was paying.

“They were all hoping to get the next bowling alley or boutique hotel or Whole Foods or a bank,” Mr. Hindy recalled.

Indeed, a hotel is being built across the street from the brewery, and the bowling alley-nightclub has opened next door. But the boom that spawned those concerns ended with the implosion of New York’s financial industry last year.

When the market cooled, Mr. Hindy signed new 15-year leases for the brewery and an adjacent building, at an average cost of about $15 a square foot — significantly higher than he had been paying but only about half of what landlords sought at the peak of the boom — he said.

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